Overview
Most businesses calculate GST/HST remittances like this: GST/HST collected minus ITCs (input tax credits) on business purchases.
The Quick Method changes the mechanics. You still charge customers the normal GST/HST rate, but instead of tracking ITCs (Input Tax Credit) on most day-to-day expenses, you remit a fixed “quick method remittance rate” applied to your GST/HST-inclusive sales. The rate is lower than the GST/HST you collected, and the difference is meant to roughly replace the ITCs you’re giving up.
Who can use the Quick Method?
You can generally elect to use the Quick Method if you meet CRA’s conditions, including:
- In business continuously for the prior 365 days (special rules exist for new registrants).
- Did not revoke the Quick Method (or simplified ITC method) in the prior 365 days.
- Not an excluded business type (see exceptions below).
- Worldwide taxable supplies (including zero-rated supplies), including associates, are not more than $400,000 under CRA’s tests.
- Have a permanent establishment in Canada.
Who cannot use it (key exceptions)
CRA lists business types that cannot use the Quick Method, including (among others):
- Bookkeeping, financial consulting, tax consulting, or tax return preparation services.
- Legal, accounting, or actuarial services in professional practice.
- Certain financial institutions, charities, public institutions, municipalities, and other public sector bodies (per CRA’s list).
How to elect
To start using the Quick Method you must file an election with CRA. Timing rules matter. The election generally needs to be effective on the first day of a reporting period. CRA sets different deadlines depending on whether you file annually or monthly/quarterly.
Election form: GST74 – Election and Revocation of an Election to Use the Quick Method of Accounting
The small tweaks that often creates the savings
1. File the election and use the correct remittance-rate
Many owner-managers accidentally use the services rate when they actually qualify for the “purchases goods for resale” rate (or vice-versa). The difference can be material.
CRA’s Quick Method guide sets out two major buckets: (1) businesses that purchase goods for resale (businesses with a minimum of 40% of the cost of goods purchased) and (2) businesses that provide services.
Quick Method rates for the two business categories:
| Businesses the purchase goods for resale | Businesses that provide services | |
| Supplies where GST at 5% applies | 1.8% | 3.6% |
| Supplies where HST at 13% applies | 8.8% | 10.5% |
See RC4058 – Quick Method rules and rates for Quick Method details and rate tables.
2. Don’t miss the 1% credit
If you qualify, CRA allows a 1% credit on the first $30,000 of eligible supplies (GST/HST-included) each fiscal year — but timing matters. Late elections can reduce or eliminate the credit benefit.
What changes operationally
When using the Quick Method:
- You still charge the normal GST/HST rate on taxable supplies.
- You calculate net tax by multiplying GST/HST-inclusive sales by the applicable quick method remittance rate(s).
- You generally cannot claim ITCs on most operating expenses and inventory purchases (because the rates already assume an allowance for ITCs).
- You can still claim ITCs on certain purchases that CRA lists (commonly including certain capital purchases).
Supplies you must treat outside the Quick Method calculation
Even if you’re a Quick Method registrant, certain supplies are excluded from the “multiply by rate” approach and must be handled separately under CRA’s rules. Examples include sales of real property and sales of capital assets.
Common pitfalls
- Assuming Quick Method is always better (it depends on your ITC profile).
- Using the wrong remittance rate category (services vs goods for resale).
- Calculating on GST/HST-exclusive sales instead of GST/HST-inclusive sales.
- Not separating ineligible supplies (real property, capital asset sales, etc.).
- Missing provinces mix rules and when multiple rates may apply.
Examples
Assumptions are simplified and for illustration; actual results depend on your exact rate category, province, and ITC profile.
Example 1 – Service business in BC (Quick Method saves)
Facts: BC management consulting corporation; taxable fees (before GST) $400,000; GST collected $20,000; ITCs under regular method $4,000; Quick Method services remittance rate example 3.6%.
Regular method: Net GST to remit = $20,000 − $4,000 = $16,000.
Quick Method: GST-inclusive revenue = $420,000. Quick remittance = $420,000 × 3.6% = $15,120.
GST payable: $15,120 – $300 credit = $14,820
Potential extra benefit: up to $300 from the 1% credit on first $30,000 of eligible supplies if conditions are met.
Example 2 – Retailer in BC (misclassification costs real money)
Facts: Retail shop; taxable sales (before GST) $300,000; GST collected $15,000; GST-inclusive sales $315,000; qualifies as goods for resale; correct remittance rate example 1.8%; wrong services rate 3.6%.
Correct Quick Method: $315,000 × 1.8% = $5,670.
Wrong Quick Method: $315,000 × 3.6% = $11,340.
Difference: $5,670 over-remitted due to wrong category/rate.
FAQ
Can I still charge 5% GST (or HST) if I use the Quick Method?
Yes. You still charge the normal GST/HST rate on taxable supplies; the Quick Method changes how you calculate what you remit.
Can I claim ITCs at all under the Quick Method?
Generally, you cannot claim ITCs on most operating expenses/inventory, but CRA lists categories of purchases where ITCs may still be available (often including certain capital purchases).
Can professionals (accounting/law/tax consulting) use the Quick Method?
Often no. CRA lists several professional services as excluded business types. Confirm against RC4058.
How do I elect?
Usually through CRA online services or by filing Form GST74, subject to timing and effective date rules.
What should I check first?
Confirm you’re using the correct remittance-rate category (services vs goods for resale) and whether you qualify for the 1% credit.
Summary table
| Topic | Regular Method | Quick Method |
| How remittance is calculated | GST/HST collected minus ITCs | GST/HST-inclusive sales × quick remittance rate(s) |
| ITCs on day-to-day expenses | Claimed normally | Generally not claimed (rates assume them) |
| ITCs on capital purchases | Claimed normally | Often still claimable for certain items (see CRA list) |
| Eligibility limit | N/A | Must meet CRA eligibility, including $400,000 threshold tests |
| Extra credit | None | Possible 1% credit on first $30,000 eligible supplies |
| Biggest pitfall | Missing ITCs | Wrong rate bucket; not separating ineligible supplies |
Need help?
If you’re a Canadian owner-manager with revenue under the Quick Method threshold, we can run a Quick Method vs Regular Method comparison using your actual GL detail, province mix, and capital purchase plans—then help you file your election with CRA properly and document the rate logic.
Book a call: Contact Finsight CPA Inc.
Learn more: Services
CRA references
CRA reference: RC4058 – Quick Method of Accounting for GST/HST
General GST/HST registrant guide (ITCs basics): RC4022
Calculate net GST/HST: CRA page